Sabah’s economy remains largely insulated from the sweeping 24% tariffs recently announced by former US President Donald Trump, as direct exports to the United States make up just 1% of the state’s total trade.

Datuk Seri Yong Teck Lee, who chairs the POIC Sabah Industrial Park and previously served as Chief Minister, said Sabah’s export market is primarily anchored in East Asia, India, Europe and ASEAN – not the US.

“Our major exports are oil and gas, palm oil, seafood, timber, silica sand, and food products – and most of these go to China, Japan, South Korea, India and Europe. 

“Only a very small portion, around RM1 billion of our RM100 billion total exports, go to the United States,” Yong said in a statement in Kota Kinabalu on Sunday. 

He said Sabah has recently started exporting copper foil to the US, but that product, along with certain wood-based items, is exempted from the new American tariffs – known as “reciprocal tariffs.”

“That’s the good news.  Copper and some of our wood products are not affected, so the so-called Trump tariffs do not significantly touch Sabah,” he said. 

Palm oil, another product targeted by the US, also poses little risk to the state’s trade balance.

“Even for palm oil, only a tiny fraction of our RM20 billion in palm oil exports is sent to the US. 

“The bulk still goes to countries like China, India and Holland. Our exporters can easily pivot to other markets,” he said.

Yong, who also leads the Sabah Progressive Party (SAPP), said the real challenge for Sabah’s palm oil industry lies not in geopolitics, but in domestic issues.

“What the industry needs is stable fertiliser prices, a dependable labour force, and better infrastructure. These are the real factors that will boost productivity,” he stressed.

However, Yong acknowledged that Sabah is not completely immune from global economic headwinds.

“If the trade war triggered by the tariffs ends up slowing down the economies of China, Japan, India or Europe – our key trading partners – then Sabah will feel the pinch due to weaker demand,” he warned.

He said any potential dip in oil revenue could be offset if Petronas raises production, following OPEC+’s recent decision to increase output by over 400,000 barrels per day.

“As long as global oil and gas demand stays strong – which OPEC says it is – Sabah can weather this,” he said.

While Sabah may be spared the brunt of the tariffs, Yong said states like Penang and Selangor could face real disruption due to their deep integration with US-based high-tech industries.

“These are the states with major American investments. The Trump tariffs are meant to bring manufacturing back to the US, and if that happens, Penang and Selangor will be hit first,” he said.

Yong pointed out that Malaysia’s involvement in the Regional Comprehensive Economic Partnership (RCEP) continues to give it access to low-tariff trade with countries in the Asia-Pacific.

“This is why Sabah is relatively unaffected – our key trade partners are within the RCEP bloc. America is just a small slice of our market,” he said. – April 6, 2025